How to Ditch a Bad Investment

Hint: It has to do with your emotions

by Laura Sinberg • Features Editor

Photograph: Santiago Cornejo/Shutterstock.com

Women often hesitate to unload poor-performing stocks because they’re hoping the share price will come back, says Eric Wasson, senior investment adviser with the Mutual Fund Store in Indianapolis. But hope is not an investment strategy. His advice: Take emotion out of the equation. Enact a trailing-stop order—a directive for your broker to sell your lagging stock when it decreases by a predetermined percentage. Wasson says the point at which you choose to sell should vary depending on the stock and your risk tolerance, but unloading when you hit a 10 percent loss is a good bet for someone who isn’t a day trader.